Prop. 39

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Molly Munger donated $44.1 million to pass Proposition 38, a measure to raise taxes for public education. The initiative failed.

Multimillionaire activists, big labor unions and major corporations combined to pump more than $363 million into political fights over 11 propositions on Tuesday’s state ballot, a California Watch analysis shows.

Prop. 38 backer Molly Munger. (neontommy/flickr)

That’s about $20 in political spending for each of California’s 18.2 million registered voters.By law, state ballot initiatives are exempt from the tough donation limits that otherwise apply in California elections.

In contests over proposed tax increases, car insurance rates, criminal justice reforms and political spending by labor unions, donors with deep pockets took full advantage.

Forty-seven donors – individuals, companies and political committees – donated more than $1 million apiece on initiative campaigns, a review of campaign finance data provided by MapLight.org shows.

Seven donors each gave $11 million or more.

The unprecedented spending spree was a sign of just how far the 101-year-old California initiative process has strayed from its origins. In the beginning, initiatives were a Progressive-era reform devised to allow ordinary citizens to sidestep a legislative process controlled by monied special interests. Continue reading →

San Franciscan Tom Steyer spending millions of his own money to support Prop. 39. (Photo: Erik Anderson)

San Francisco hedge fund manager Tom Steyer has already fought and won a battle at the California ballot box. In 2010, he helped defeat Proposition 23. That measure would have rolled back California’s landmark global warming law. Now he’s putting $20 million of his own money into passing Proposition 39.

“It’s about tax fairness,” Steyer says. “We are closing a loophole, but all we are asking out-of-state companies to do is to pay taxes on their income exactly the way that we do. And what that will do is bring into the state of California over a billion dollars every single year, and all from companies from out of state.”

The Legislative Analyst’s Office has estimated that’s the amount of revenue the tax-change will generate. The LAO also said that “while only a small portion of corporations are multistate, [they] pay the vast majority of the state’s corporate income taxes.”

The history of Prop 39 is rooted in a change in the tax code that the California Legislature made in 2009. That’s when lawmakers gave companies a choice of how to pay their corporate taxes, says San Diego State University business professor Steve Gill.

“For years and years and years, we had a long tradition of using a three-factor apportionment formula,” Gill says, “which meant we look at three different factors that are economic drivers of income: sales, property and payroll.” Continue reading →